Flag carrier Thai Airways International Public Co. Ltd., still reeling from a series of net losses for three consecutive years, is now filing a restructuring plan before the bankruptcy court.
Following a cabinet meeting on Tuesday, Thai Prime Minister Prayut Chan-o-cha said that the state-owned airline will officially enter a rehabilitation process.
“This is my decision and the cabinet’s,” he said.
The State Enterprise Committee, which oversees policies for state-owned companies and is chaired by the prime minister himself, finalized on Monday the process to put the airline under a rehabilitation plan. It retracted the original plan to grant the airline a short-term loan backed by the Ministry of Finance. The latter is the carrier’s controlling owner, having owned 51 percent of its shares.
Narumon Pinyosinwat, the government spokesperson, clarified that the airline will seek rescue from the court but not for bankruptcy.
“The prime minister has stressed the need to make the public understand that this is not about entering bankruptcy, but undergoing a process of rehabilitation,” she underscored.
In a separate comment, Thai Airways second vice chairman and acting president Chakkrit Parapuntakul said that the restructuring plan was necessary “to change … to become a stronger and more sustainable entity.”
“Thai Airways International is committed to doing everything possible to emerge from the crisis,” he added.
Under the rehabilitation process of Thailand, an official receiver will be appointed to assist the debtor facing a liquidity problem by giving the firm a shot at rehabilitation before being insolvent, so long as the debtor secures the Bankruptcy Court’s green light.
A stay from debt collection will immediately take effect to restrict creditors from pursuing Thai Airways for amounts owed to them.
The court will then appoint an executor to draft a business rehabilitation plan. While the debtor is expected to nominate a candidate to draft a restructuring plan, its creditors would have the power to object if they deem the person not suitable.
It can be recalled that Thai Airways posted net losses in the years 2008, 2011, 2013, 2014, 2015, 2017, 2018, and 2019. As of December 31, its total liabilities were at $7.6 billion, while total assets stood at $8.03 billion. Shareholders’ equity was only at 11 billion baht, or equivalent to only 4.6 percent of the company’s total assets.
On Monday, Thai Airways announced that business operations will remain suspended until June 30 as a result of the Civil Aviation Authority of Thailand’s extension of landing ban for international flights amid the virus outbreak.
“Thai Airways will be under the protection of the court,” the prime minister said.
“[The court] will consider the appointment of professionals to manage the rehabilitation of Thai Airways,” he added.
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